Virtual Appliances at the Gates

It sure is fun to watch the unfolding of what could be the most significant technological shift of the digital age since Microsoft wormed the DOS licensing rights from IBM.

This time, it's Microsoft, Apple, Sun and other OS providers on the hook. The buzz at LinuxWorld was VMware co-founder Mendel Rosenblum's speech in which he basically said that virtual appliances will make host operating systems irrelevant in the near future. And although it's way too early to say whether VMware is the long-prophesied Microsoft killer, we do have to tip our hats to a very strong contender and the savvy to make a splash like this just before IPO-time.

Upstarts like VMware are challenging the traditional dominance of the OS vendors in communicating with hardware. A virtual hypervisor gets between the OS and the hardware, allowing users to set up self-contained partitions to run only the applications and related OS code they need. Customers get improved server utilization, a more stable environment, simplified management and possibly improved security. And if the OS vendors try to limit their OS licenses to prevent this, they'll hear howls of protest from their customers, and probably the government too, which is keen on energy conservation these days.

What really makes this whole scenario credible is that, not only are major hardware manufacturers like IBM, HP and Dell jumping on the virtualization bandwagon, but AMD and Intel are looking to incorporate it right on their processors. Both firms are playing leap-frog in layering virtualization hypervisor technology into their silicon, along with the on-chip memory controllers, high-bandwidth buses and acceleration platforms needed to support it. With hardware support, it's easy to imagine a virtualization stack with its own OS altogether.

In the meantime, a healthy field of virtualization platform providers, including Microsoft, is proving fertile ground for virtualization appliance vendors targeting numerous enterprise functions. One of the latest is JumpBox, which offers a bundled package of wiki, CRM, word processing and other functions into a single package. And let's not forget Cisco Systems, which see opportunities to launch into the enterprise not through typical OS-type applications, but through VAs.

So does all this mean Microsoft is finally through? Don't bet on it. There's still plenty to be made in consumer and business software, and even the OS will continue in one form or another, although probably not as the all-controlling host. But it's fair to say that, for a company whose market dominance has significantly eroded since the heyday of the '90s, this could be a significant shot to the gut.